Gold prices were steady in Asian trading on Wednesday as investors remained focused on the complex peace negotiations between the United States and Iran. The precious metal has traded within a narrow range of $4,400 to $4,600 an ounce over the past ten days, amid conflicting signals regarding the ongoing dispute.
Spot gold was steady at $4,505.93 an ounce, while futures rose slightly by 0.1% to $4,539.01. This followed a decline in the metal on Tuesday after reports of US airstrikes on targets in southern Iran.
Inflation linked to the war's repercussions, particularly the surge in energy costs during March and April, is exerting the greatest downward pressure on gold prices. These factors reinforce expectations that central banks, especially the US Federal Reserve, will raise interest rates again, a move that typically diminishes the appeal of non-yielding assets like gold. Data indicates that markets are pricing in a near 40% probability of a US rate hike by December, according to FedWatch.
Despite ongoing indirect talks, media reports indicate that reaching an agreement in the near future seems unlikely, given fundamental disagreements over the Iranian nuclear program and freedom of navigation in the Strait of Hormuz. Gold has generally declined since the conflict began, as investor concerns about inflation and interest rates have overshadowed the precious metal's appeal as a safe haven.
